Correlation Between Kentucky Tax-free and American Independence
Can any of the company-specific risk be diversified away by investing in both Kentucky Tax-free and American Independence at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Kentucky Tax-free and American Independence into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Kentucky Tax Free Income and American Independence Kansas, you can compare the effects of market volatilities on Kentucky Tax-free and American Independence and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Kentucky Tax-free with a short position of American Independence. Check out your portfolio center. Please also check ongoing floating volatility patterns of Kentucky Tax-free and American Independence.
Diversification Opportunities for Kentucky Tax-free and American Independence
0.92 | Correlation Coefficient |
Almost no diversification
The 3 months correlation between Kentucky and American is 0.92. Overlapping area represents the amount of risk that can be diversified away by holding Kentucky Tax Free Income and American Independence Kansas in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on American Independence and Kentucky Tax-free is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Kentucky Tax Free Income are associated (or correlated) with American Independence. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of American Independence has no effect on the direction of Kentucky Tax-free i.e., Kentucky Tax-free and American Independence go up and down completely randomly.
Pair Corralation between Kentucky Tax-free and American Independence
Assuming the 90 days horizon Kentucky Tax Free Income is expected to generate 1.29 times more return on investment than American Independence. However, Kentucky Tax-free is 1.29 times more volatile than American Independence Kansas. It trades about 0.17 of its potential returns per unit of risk. American Independence Kansas is currently generating about 0.16 per unit of risk. If you would invest 715.00 in Kentucky Tax Free Income on August 25, 2024 and sell it today you would earn a total of 8.00 from holding Kentucky Tax Free Income or generate 1.12% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Very Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Kentucky Tax Free Income vs. American Independence Kansas
Performance |
| Timeline |
| Kentucky Tax Free |
| American Independence |
Kentucky Tax-free and American Independence Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Kentucky Tax-free and American Independence
The main advantage of trading using opposite Kentucky Tax-free and American Independence positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Kentucky Tax-free position performs unexpectedly, American Independence can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in American Independence will offset losses from the drop in American Independence's long position.| Kentucky Tax-free vs. Kinetics Global Fund | Kentucky Tax-free vs. Dodge Global Stock | Kentucky Tax-free vs. Morgan Stanley Global | Kentucky Tax-free vs. Vanguard Global Credit |
| American Independence vs. Mainstay Vertible Fund | American Independence vs. Absolute Convertible Arbitrage | American Independence vs. Lord Abbett Vertible | American Independence vs. Lord Abbett Vertible |
Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Commodity Directory module to find actively traded commodities issued by global exchanges.
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